Welcome
To the blog for small and medium sized business (SME) owners.
The control of business overhead is critical to the ongoing success of any organization.
The ability to pass on increased costs in higher selling prices may be resisted by the customer and competitors may move to acquire your market share. Indeed customers may seek price reductions and the challenge for the business will be to offset any selling price reductions against savings derived from improved efficiency savings.
Understand your cost base!
The interrelationship of costs should be appreciated. Costs are generally fixed or variable in nature and the ability to recognize the impact on the cost base of:
- Changes in volumes
- Implementation of improvement programmes
- Process changes
- Technological changes
- Product design changes
- Cost price increases
- Under utilized or redundant fixed assets
- Obsolete stocks
- Duplication, waste, errors
is critical.
The above factors will change the cost structure and understanding how, by how much and when will allow the business owner to control the business more effectively.
Learn more contact David Willetts, DAW Consulting
Discover the steps to take to avoid your business spiralling out of control.
1. Review and Assess the Present Situation
2. Develop Plans and Business Strategy
3. Communicate With Key Employees
4. Communicate With Other Employees
5. Meet the Bank
6. Meet Customers
7. Meet Suppliers
8. Conserve Cash
9. Implement New/Update Systems and Procedures
10. Monitor, Measure and Take Action
More tips on How to Avoid Financial Disaster and Business Turnaround
If you need help in improving your business contact for a free confidential discussion.David Willetts
Business owner seek to grow their businesses. However, it is important to understand how your business can gain from undertaking a Strategic Business Review.
Why should a business review be undertaken if your business is growing and growing profitably? Well the review should not only recognise past performance, but also assess the prospects for the business in the future and recognising historical performance is no guarantee to future success.
Read Gain from a Strategic Business Review of Your Business
Have you considered the impact on your businesses of making mistakes?
Possibly not.
However, as SME business owners struggle to meet the ever demanding expectations of customers regarding service and price, the cost of rectifying mistakes should be viewed as an opportunity to reduce overall costs and improve profits.
It is important to understand what a mistake is.
Examples of common mistakes include:
1. products are not manufactured to specification first time, each and every time
2. services provided do not meet the expected standard and are re-visited
3. errors or omissions in communication render additional instructions being given
4. running out of supplies/parts
5. wrong delivery times, quantities or goods
6. invoice errors
7. misfiling of documents
The impact for the business will be increased cost but may also result in lost sales and lost customers.
What actions should be taken to eliminate waste, scrap or process duplication?
A business review should be undertaken and quality management systems be implemented. This may require the environment within the organization being changed; maybe a move to a no-blame culture, staff training increased and encouraging staff to become decision makers.
In addition the introduction, or updating, of ERP systems or the like should promote the documentation of systems and processes that will provide a platform on which a recognized and structured approach in communication and data collection can be adopted.
Learn more about quality management systems (QMS) and improve your business performance and profitability.
The control of receivables cash flow is critical in ensuring good cash flow for businesses.
However, it is often found easy changes in the cash collection processs will dramactically improve the timely amount of cash received. Discover The Ten Important Sales Ledger Tips to improve your cash flow.
Are all SME business owners good leaders – sadly not.
Many business owners possess the technical skills to develop, make or sell a product or service, but do not have the business acumen to convert their talents into a successful business.
Why is this?
It may be:
- a negativity towards the business world
- an unwillingness to add good leadership skills to their skill set
- time constraints preventing the learning of new skills
- a blasé attitude towards their business; “it has been OK in the past it will work in the future”
In many expanding SME businesses the role of the owner must change if success is to be achieved. The business will become more complex and the owner should devote more time to leading the business and less time actually executing the work.
This change will necessitate the gaining of leadership skills.
What are leadership skills?
Leadership is about having the vision for the business, setting the goals and having the ability to inspire and enthuse others to share and achieve those goals. The passion and drive to reach the goals is of paramount importance, however, directing others in a manner that will encourage their commitment to being part of ‘the team’ will be critical.
Learn more on how to improve your leadership skills
Care should be taken to ensure a business plan includes all important data about the business.
What is important will vary from business to business, however, there are 7 topics that will most probably be included in a business plan.
Read 7 Topics for Inclusion in a Business Plan
A recent report from T Mobile suggests that UK entrepreneurs are struggling to achieve all that they would like from their business.
Finding new customers, feeling isolated, too much government 'red tape' and difficulty in achieving a work life balance contributed to the problems, whilst reality TV shows increase the status of entrepreneurs they fail to inspire others to start a business.
The role of the accountant or finance director will vary between industries and the size of company. As a general rule the smaller the organisation the more general will be the virtual finance director’s work; whereas in larger businesses the different aspects of finance work will each be covered by accounting specialists.
The finance specialist in a SME business will therefore take responsibility for different tasks that may include work associated with the management of the business. This variety of work may not be enjoyed by finance staff in large corporations.
Within the small medium business (SME) sector the typical workload of an accountant or virtual FD may include:
1. Preparation and reporting of monthly management accounts and year end results.
2. Identification of variances from plan and recommendation of corrective actions to recover from any shortfall against profit projections
3. Taking responsibility for preparing business plans, annual budgets and cash flow forecasts
4. Maintaining control of accounting systems to ensure timely, accurate and complete processing of financial data in accordance with internal procedures
5. Overseeing the management of the purchase ledger and credit control functions.
6. Ensuring all Balance Sheet accounts are reconciled regularly and take action on any discrepancies identified
7. Implementing on-going control of cash including regular (weekly, monthly) reconciliations of bank accounts
8. Contributing to the maintenance of business wide systems and procedures to ensure good corporate governance is adhered to
9. Filing all statutory returns
10. Training/coaching others within the business and effectively communicating with all stakeholders
Avoid being one of the troubled businesses that are predicted to fail in 2008.
The UK's leading accounting practices are expecting a significant increase in insolvency work in 2008. Fears exist that the credit crisis will cause many businesses to go bust with insolvencies expected to rise by 10%.
The head of KPMG restructuring advisory, stated ‘Companies have been kept alive artificially, but now they’ll be caught up.’
Read the report here.
Take steps now to avoid your business failing. Take control of your business, plan and most importantly manage the cash.
On 15th December 2007 new regulations on money laundering will come into effect in the UK.
For money laundering purposes all 'external accountants’ must be supervised by a designated Supervisory Authority. The definition of an 'external accountant' being:
“External accountant” means a firm or sole practitioner who by way of business provides accountancy services to other persons, when providing such services.
David Willetts is regulated by the Chartered Institute of Management Accountants (CIMA), a professional body designated by HM Treasury and meets the requirements.
The Money Laundering Regulations can be read
here.
A report from PricewaterhouseCoopers finds that British family firms are failing to adequately plan for succession in their businesses.
Some 1454 family businesses from 28 countries were surveyed and only 30% of British family firms had chosen a successor compared with the international average of 50%.
Government policy, legislation and a shortage of senior skilled staff were identified as areas of concern by UK family businesses.
Read the report here and for further details on business planning and resolving the skill shortages visit DAW Consulting website.
